The European Union (EU) and the Financial Sector Deepening Trust (FSDT) have entered into an agreement worth Tsh 11.23 billion (EUR 4 million) aimed at promoting inclusive finance for small and medium-sized enterprises (SMEs) and startups operated by women and youth.
Speaking at an information session showcasing European Union financing opportunities in Tanzania, Peter Kingu, the Head of Policy, SME Development, and Inclusive Finance at FSDT, said the fund would provide capital and operating grants to startups and SMEs that support green and sustainable activities.
“We’re looking for this particular grant to enable youth and women-led enterprises to create more jobs and drive sustainable and green activities,” said Mr. Kingu.
The grants will support both registered and informal businesses in an organized marketplace. For informal businesses, the grants will assist in their formalization so that they can have opportunities to access more credit products from financial institutions.
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The support will range from 1 million to 5 million shillings for micro entrepreneurs, 5 million to 25 million for small entrepreneurs, and 25 million to 50 million for medium enterprises. These are non-returnable grants.
“Beneficiaries will need to be responsible to ensure they create the expected impacts,” insisted Mr. Kingu. “A team of analysts will evaluate proposals, and once approved, mandatory training will be provided to beneficiaries.”
In Tanzania, close to 90 percent of businesses are operated by SMEs across numerous sectors, contributing around 35 percent of the Gross Domestic Product. Most of these businesses are run by women.
EU Head of Cooperation in Tanzania, Cedric Merel, pointed out that the EU embassy in Tanzania is proud to be a reliable partner in access to finance for all segments of the entrepreneurial sector, from micro-enterprises and startups to SMEs, mid-caps, and corporate enterprises.
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They have been important development partners by providing a 360-degree approach to investments in Tanzania by supporting the blueprint regulatory reform agenda, enhancing domestic resource mobilization, and strengthening the capital market.
Riziki Haji Mmanga, a member of the Umoja Ni Nguvu women cooperative in Makunduchi Zanzibar, working in seaweed farming, is among the beneficiaries of previous EU support through the European Investment Bank (EIB) and CRDB Bank partnership.
Speaking with The Chanzo during the conference, Riziki, on behalf of cooperative members, said that through EIB and CRDB support, they managed to acquire a boat, which has facilitated their work.
“We are very grateful because the boat has helped us a lot in transporting seaweed from the sea,” said Riziki. “We were having a lot of trouble before.”
The FSDT, through this fund, will also work with financial institutions like banks to provide technical assistance, helping them improve the delivery of credit products, particularly to startups and SMEs.
